James Wilson, Securities Litigation Partner James Wilson encourages investors who have suffered losses exceeding $100,000 in Kornit to contact him directly for information about their options
New York, New York–(Newsfile Corp. – March 26, 2023) – Faruqi & Faruqi, LLP, a leading national securities law firm, is investigating potential claims against Kornit Digital Ltd. (“Kornit ” or the “Company”) (NASDAQ: KRNT) and reminds investors of the April 17, 2023 deadline to seek the role of lead plaintiff in a federal securities class action that has been filed against the Company.
You can lose more than $100,000 if you invest in Kornit options or stock between February 17-2021 and July 5-2022 and would like to discuss your legal rights, call Faruqi & Faruqi partner Josh Wilson directly at 877-247-4292 Oder 212-983-9330 (Ext. 1310). For more information, click here www.faruqilaw.com/KRNT.
It is free and you are under no obligation.
Faruqi & Faruqi is a leading minority and Woman-owned national securities law firm with offices in New York, Pennsylvania, California and Georgia.
Kornit is a manufacturer of industrial digital printing products for textile, garment and apparel industries. Digital inkjet printers from Kornit use an eco-friendly technique that allows them to print on finished garments as well as large rolls of unfinished material.
Sales of both its printing systems and textile inks as well as other consumable products used in the Company’s digital printers generate revenue. Kornit provides technical support and maintenance services as well as customer assistance to printer end-users. Kornit began to offer software services during the Class period. These include a complete suite of production and fulfillment solutions, called KornitX. It provides automated workflows and inventory management, as well as production and workflow systems.
Amazon.com, Inc., is Kornit’s largest client. Other major customers for Kornit in the Class Period include Delta Apparel, Inc., an apparel and activewear company (“Delta Apparel”), Fanatics, Inc. (“Fanatics”), which provides licensed sports merchandise. Kornit receives over 60% of its revenue from the ten largest customers. Kornit generates a substantial portion of its revenue from its largest customers. Therefore, it is crucial that Kornit maintains these major customers in order to meet its ambitious goal of $1 billion revenue in 2026.
According to the complaint, defendants made numerous materially misleading statements regarding Kornit’s business operations during the Class Period. Particularly, defendants repeatedly praised Kornit’s technological advantages and promised investors that there is virtually no significant competition in the direct-to-garment printing market. The Defendants assured investors there is strong demand for Kornit’s digital printing products and consumables such as textile dyes. They also promised that the Company offers services for customers in order to help them maintain their digital printers as well as manage their customer workflow. Investors were also assured by Defendants that Kornit’s strong customer base would allow it to attract new customers and maintain existing customers. This would reduce the risk associated with large portions of the Company’s revenues being concentrated in a few large customers.
To be honest, defendants knew or, at the very least, disregard that Company’s digital printer business had severe quality control and customer service problems. These issues and deficiencies caused Kornit a loss of market share, which in turn led to lower revenue. Customers went to digital printers that were more reliable. Because of the misrepresentations by Defendants, Kornit’s ordinary shares were traded at artificially high prices during the Class Period.
The truth was revealed to investors by Delta Apparel, Fanatics and Fanatics on March 28th 2022. They announced that they had been working with one of Kornit’s main competitors for several months to create a digital printing technology directly competing with Kornit’s. Kornit was likely to lose two of its largest customers.
Kornit, which reported revenues exceeding expectations on May 11, 2022, posted a net profit of $5.2million for the first quarter 2022. That compares to an operating profit of $5.1million in the preceding year. In addition, revenue guidance was issued by Kornit for the second quarter 2022. This is significantly lower than analysts expected. Kornit blamed the disappointing guidance on a slower pace of orders received from customers within the e-commerce marketplace. Kornit also acknowledged that the Company knew, at least for the last two quarters of the year, that Delta Apparel had purchased digital printing equipment from a Kornit rival. The price of Kornit shares fell by $18.78 per Share, or 33% due to these disclosures
Kornit, then, announced on July 5, 2022, that it was going to report significant revenue loss for its second quarter in 2022. Kornit forecasted that revenue would range from $56.4 million-$59.4 million for the second quarter, which is significantly lower than the $85 million to $95 million revenue guidance the Company gave less than two months ago. Kornit explained that the significant revenue loss was due to “a substantially slower pace in direct-to-garment orders (DTG),” compared with previous expectations. This disclosure caused Kornit’s shares to drop by $2.10/share, or 25.7%.
The lead plaintiff appointed by the court is an investor who has the greatest financial interest in the relief requested by the class. He or she is adequate and representative of all class members and directs and monitors litigation on behalf the putative classes. The Court may appoint any member of the class to act as the lead plaintiff. They can also choose not to participate in the litigation and be an absent member. Your rights to part in any recovery are not affected whether or not you serve as lead plaintiff.
Faruqi & Faruqi, LLP also encourages anyone with information regarding Kornit’s conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
Attorney Advertising. The law firm responsible for this advertisement is Faruqi & Faruqi, LLP (www.faruqilaw.com). The past results don’t guarantee or foretell a similar outcome in future matters. Your case will be discussed with us. All communication will be kept confidential.
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